Mattel, Inc. (NasdaqGS:MAT) signed a definitive agreement to acquire MEGA Brands Inc. (TSX:MB) from Fairfax Financial Holdings Limited (TSX:FFH), Chiefswood Holdings Limited, Invesco Canada Ltd., RBC Global Asset Management Inc. and other shareholders for approximately CAD 430 million in cash on February 27, 2014. Under the terms of the agreement, Mattel, Inc. will pay CAD 17.75 per share for the outstanding shares of MEGA Brands Inc. Warrant holders may acquire one common share of MEGA Brands in exchange for every 20 warrants at an exercise price of CAD 9.94 per common share. The warrants expire on March 30, 2015. The total consideration paid to warrant holders is CAD 1.7 million, option holders is CAD 12.9 million and DSU (deferred share unit) and RUS (restricted share unit) holders will get CAD 2.2 million and CAD 5.3 million respectively as consideration in the transaction. Mattel plans to fund the acquisition through a combination of new debt and cash on hand. The arrangement agreement provides that Board of Directors of MEGA Brands may, under certain circumstances, terminate the agreement in favor of an unsolicited superior proposal, subject to payment of a termination fee of CAD 12 million to Mattel and subject to a right of Mattel to match the superior proposal in question.

The Board of Directors of MEGA Brands has unanimously approved the transaction and recommends that MEGA Brands common shareholders approve it. Each of Fairfax, Victor Joseph Bertrand, Marc Bertrand and Vic Bertrand, who together hold approximately 39% of the outstanding common shares of MEGA Brands, have entered into voting support agreements and agreed to vote their common shares in favor of the arrangement. The arrangement agreement provides that MEGA Brands is subject to non-solicitation provisions. Superior Court of Québec approved plan of arrangement. The transaction is also subject to dissenter's rights and regulatory approvals. The transaction is also subject to the approval of the superior court of Quebec. As on March 31, 2014, Mega Brands announced that the special meeting of shareholders will be held on April 23, 2014 to approve the transaction. MEGA Brands also announced that it intends to reduce the outstanding principal amount of its debentures by CAD 8.6 million using proceeds from the exercise of common share purchase warrants, as permitted under the terms of the debenture indenture dated January 28, 2010, governing its 10% senior secured debentures. In connection with the closing of transaction, MEGA Brands intends to refinance and, thereafter, redeem all of the remaining outstanding Debentures at a redemption price equal to 105% of the principal amount of the Debentures, plus accrued and unpaid interest, pursuant to the terms of the debenture indenture. As on April 23, 2014 the transaction has been approved by the shareholders of MEGA Brands. MEGA Brands also announced that the waiting period required under the Hart-Scott-Rodino antitrust improvements act of 1976 expired in early April. As on April 25, 2014 the transaction has been approved by the Superior Court of Quebec. The transaction is expected to complete by April 30, 2014.

RBC Capital Markets Inc. is acted as financial advisor to Mattel, Inc. James Beaubien, Jim Beaubien, Jordan Miller, Caitlin Gibson, Mike Montgomery, David Taub, Alice Chung, Julie Crisp, Joseph Farrell, Matthew Walch, Julie Dalke, Aryeh Richmond, Nicholas DeNovio, Tali Weiss, Michael Feeley, Aron Potash, Kim Boras, Karen Silverman, Amanda Reeves and Christeen Walch of Latham & Watkins LLP acted as legal advisors to Mattel, Inc. David Woollcombe, Jean Charest, Max Rogan, Deandre Schubert, Krista Lawson, Ryan Hornby, Mark McEwan, Francois Giroux, Gabrielle Richards, Elaine Buzzell, Mathieu Dubord, Marjolaine Hémond Hotte, Charles Morgan, Véronique Wattiez Larose, Oliver Borgers, John Boscariol, Rachel Solyom, Cindy Vaillancourt, and Dominique Amyot-Bilodeau of McCarthy Tetrault LLP acted as legal advisors to Mattel, Inc. Rothschild Inc. acted as a financial advisor to MEGA Brands. Shahir Guindi, Christopher Main, Chima Ubani, Raphaël Amram, Fady Hammal, Etienne Massicotte, Mark Brender, Antoine Stébenne, Marc Richardson-Arnould, Peter Franklyn, Sven Poysa, Julien Ranger, Sandra Cohen, Donna White, and Dan Kirby of Osler, Hoskin & Harcourt LLP acted as legal advisor to MEGA Brands. O'Melveny & Myers LLP acted as legal advisors to RBC Capital. Davies Ward Phillips & Vineberg LLP acted as a legal advisor to Rothschild Inc. Beau Buffier and Kelly Karapetyan of Shearman & Sterling LLP acted as legal advisor to MEGA Brands Inc. CST Phoenix Advisors acted as information agent to MEGA Brands and is expected to receive fees of up to CAD 30,000. CST Trust Company acted as depositary for Mega Brands.